New Delhi, Aug. 7 -- The Lok Sabha on 6 August passed the Taxation and Other Laws (Amendment) Bill, 2026, which amends the Payment and Settlement Systems Act, 2007 and allows the government to bring back merchant discount rate (MDR) charges on transactions conducted through the unified payments interface (UPI) system.

The lower house of Parliament on Thursday, approved the legislation that seeks to "fund UPI's next phase of growth". This could lead to the scrapping of the zero MDR provision under Section 10A and allow banks and payments system providers (PSPs) to likely impose charges on high value UPI transactions.

Raghav Muthanna, Partner, CMS IndusLaw noted that this marks a significant shift in the digital payment landscape in India...